Smoke billows out of a chimney stack of steel works factories in Port Kembla, south of Sydney in this July 2, 2014 file photo. Australia's government repealed a much-maligned carbon tax on the nation's worst greenhouse gas polluters on Thursday, July 17, 2014, ending years of contention over a measure that became political poison for the lawmakers who imposed it.

Sydney — Australia has become the first nation in the developed world to wind back legislation aimed at reducing greenhouse gas emissions, after the Senate voted to scrap the controversial carbon tax on Thursday.

The vote has delivered a major victory to the conservative government of Prime Minister Tony Abbott, who went into last year’s election promising to abolish the “toxic tax” which he said threatened the nation’s economy, the world's 12th largest.

After days of tense negotiations the repeal bill passed the Senate 39 to 32.

The scrapping of the carbon tax comes as Australia prepares to host the G20 summit in Brisbane in November. United StatesPresident Barack Obama, who recently unveiled a plan to reduce carbon dioxide emissions from power plants by 30 percent by 2030 from 2005 levels, wants climate change to be one of the main items on the G20’s agenda.

But Mr. Abbott, who has questioned the science of human-caused climate change, is resisting the move. The issue was a major sticking point during his first meeting as prime minister with Mr. Obama in Washington last month, with Abbott saying he would not support any measure aimed at reducing greenhouse gases that would “clobber the economy.”

The vote means that 348 companies will no longer have to pay a penalty on carbon emissions, currently just under $25 a ton. The government wants to replace the carbon tax with a taxpayer funded $2.4 billion "Direct Action Plan" which will pay industry incentives to use cleaner energy, but imposes no overall limits on greenhouse pollution.

Abbott hailed the repeal of the carbon tax as great news for families and businesses. “Scrapping the carbon tax is a foundation of the government's economic action strategy,” he said in a statement.

Australia is one of the world's largest per capita greenhouse-gas emitters due to its reliance on coal-burning power stations. A recent Morgan Poll of the Australian public found that 88 percent of respondents agreed it was important for Australia to reduce its emissions of carbon dioxide, but only 46 percent supported the carbon tax.

The tax was blamed for driving up energy costs for consumers and business. The government has said the average consumer will now be $515 a year better off.

The repeal has raised questions over Australia's ability to meet its promise to reduce its emissions levels by 5 percent on 2000 levels by 2020.

Ripple effects?

Climate change activists are worried about the possible ripple effects of the repeal, as world powers struggle to prevent the global temperature from rising three degrees Fahrenheit above 19th century levels as economies grow. Australia was one of the first countries outside of Europe to introduce a carbon price when it adopted the tax in 2012.

Programs to limit emissions are in place in Europe, parts of the US and Canada, Japan, and New Zealand. South Korea is expected to begin emissions trading next year, and China is starting emissions trading pilot programs in seven locations, according to the Wall Street Journal.

But Australia isn't alone in waffling. Canada withdrew from the Kyoto protocol in 2011, on the grounds that the agreement would unfairly harm its fossil-fuel reliant economy. And last year Japan reneged on promises to cut greenhouse emissions, saying it will release 3 percent more emissions by 2020, instead of a 25 percent cut on 1990 levels as previously pledged. That was due to fallout from the 2011 Fukushima disaster which shuttered its nuclear reactors.

"At international climate talks last year in Warsaw, Japan, Canada and Australia were standouts in going backward, and so steps like this do matter," John Connor, chief executive of Australia's Climate Institute think tank told the Wall Street Journal.

The repeal of Australia’s carbon price "flies in the face of three giant realities," says Michael Raupach, director of the Climate Change Institute at the Australian National University in Canberra, who opposed the repeal. "Human-induced climate change, the proper role of government as a defender of the common good, and the emerging quiet energy-carbon revolution.”

Carbon pricing was introduced in 2012 by former Labor Prime Minister Julia Gillard, despite promising voters there would never be a carbon tax under a government she led.

Her “broken promise” eroded Labor’s popularity and paved the way for her replacement by Kevin Rudd. He went into the last election vowing to replace the tax with an emissions trading scheme, but was voted out of office before taking action.